A numerically controlled milling machine was purchased for $95,000. The estimated salvage value was $15,000 after 15 years. (a) What is the machine's book value after 5 years using 7 year MACRS depreciation? (b) If you sold the mill early at year 6 for $20,000 did you make a profit or a loss? a. (a) $21,194.50 (b) profit of $7230 b. (a) $29,678 (b) loss of $9,678 c. (a) $12,721 (b) profit of $15,763 d. None of the above *

A numerically controlled milling machine was purchased for $95,000. The estimated salvage value was $15,000 after 15 years. (a) What is the machine's book value after 5 years using 7 year MACRS depreciation? (b) If you sold the mill early at year 6 for $20,000 did you make a profit or a loss? a. (a) $21,194.50 (b) profit of $7230 b. (a) $29,678 (b) loss of $9,678 c. (a) $12,721 (b) profit of $15,763 d. None of the above *

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

Loanable Funds Theory

The loanable funds theory is a neoclassical theory that determines the interest rate where the demand for loanable investments and supply of loanable funds intersect. To determine the interest rate, this theory employs linear regression and a demand curve. At the equilibrium point, demand for borrowings and demand for the issuance of borrowing funds are inextricably linked. This point of equilibrium should equalize demand and the supply of money available for borrowing.

Question

M10

A numerically controlled milling machine was purchased for $95,000. The estimated
salvage value was $15,000 after 15 years.
(a) What is the machine's book value after 5 years using 7 year MACRS depreciation?
(b) If you sold the mill early at year 6 for $20,000 did you make a profit or a loss?
a. (a) $21,194.50 (b) profit of $7230
b.
(a) $29,678 (b) loss of $9,678
c. (a) $12,721 (b) profit of $15,763
d. None of the above *

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